Debt collectors are not given free reign to use any methods they see fit in order to collect a debt. Quite to the contrary, collection agencies and attorneys (CA) are strictly governed by federal law, specifically the "Fair Debt Collection Practices Act" (FDCPA).

The FDCPA provides detailed descriptions of consumer rights. Additionally, there are many court cases establishing further interpretation and precedence of how consumers are protected. Unfortunately, abusive and illegal collection practices are still very common, and worse, most consumers have no idea of what their rights are or how to protect themselves and fight back against what has become an unscrupulous industry.

Following are explanations of consumer rights as spelled out in the FDCPA, also discussed is how CAs commonly violate these laws and supporting case law. The topics covered in this section extend beyond just those rights you have regarding Debt Validation since there are many other important rights to protect regarding the collection process. The purpose of the content in this section is to arm you with sufficient knowledge so you are empowered to protect yourself and pursue/defend your rights in court if necessary.

The Initial Communication From a Debt Collector

A debt collector must provide you with a written notice (letter) stating the five items listed below in the statute within 5 days of initially contacting you.

 

FDCPA Section 809. Validation of debts [15 USC 1692g] (a) Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing— the amount of the debt; the name of the creditor to whom the debt is owed; a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector; a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and a statement that, upon the consumer’s written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.

 

If written notice is not sent within this 5-day period, then the debt collector is in violation of the FDCPA. Generally, this means that you should receive notice within 8 to 10 days, allowing for mail delivery time.

Upon receiving this notice, you then have 30 days to request validation of the debt. This is described in full detail in "The Debt Validation Process".

Ineffective Validation Notice From a Debt Collector

The written notice from a debt collector (sent within 5 days of initial communication) must have exact wording from the statute as stated above;

If the notice does not contain the wording from the statute, then it may be a violation of the FDCPA and thereby giving you the opportunity to pursue the debt collector in court for a statutory award of $1000. An example follows.

In the case of Smith v Hecker, No. Civ.A. 04-5820, 2005 WL 894812 (E.D. Pa. April 18, 2005), a debt collector (Attorney Laurence Hecker) sent a debtor (Tamara Smith) a letter notifying her that he was attempting to collect a debt she owed. In the letter, Hecker stated:

"UNLESS YOU, THE CONSUMER, WITHIN THIRTY DAYS AFTER RECEIPT OF THIS NOTICE, DISPUTE THE VALIDITY OF THE DEBT, OR ANY PORTION THEREOF, THE DEBT WILL BE ASSESSED VALID."

The debtor (Smith) asserted that this letter was an ineffective validation notice thereby violating section 1692g(a) of the FDCPA because of the use of the phrase "will be assessed valid" instead of the statutory phrase "will be assumed to be valid" and the statutory phrase "by the debt collector" was omitted. The debtor argued that the phrase "will be assessed valid" made the letter an ineffective validation notice because it could confuse the least sophisticated debtor and lead the debtor to believe that the debt will be determined valid by some entity of authority such as a court. The debtor also argued that the omission of the phrase "by the debt collector" made the letter an ineffective validation notice because it similarly could confuse the least sophisticated debtor as to who or what entity will assess the debt.

The district court judge, agreeing with the debtor, held "the phrase 'will be assessed valid' and the subsequent omission of any reference to the entity that will be 'assessing' the debt is likely to confuse or mislead the least sophisticated debtor into believing that her debt would be determined to be valid by an entity of authority. The debt collection letter does not comply with section 1692g(a), is deceptive, and, therefore, does not convey an effective validation notice."

After You Send a Request for Validation of a Debt

As described in "The Debt Validation Process" the difficulty CAs often have in validating a disputed debt, may lead to a violation of the FDCPA by the CA.

After you send a request for validation, the FDCPA clearly states that unless they provide adequate verification of the debt, a collection agency:

• Cannot make any written attempts to collect the debt. See statute below; [15 USC 1692g(b)]
• Cannot contact you or your employer about the debt. See statute below; [15 USC 1692c(a)(3)]
• Cannot report the debt to the credit reporting agencies. (This was established in the case of Twyla Boatley vs. Diem Corporation, No. CIV 03-0762 United States District Court for the District of Arizona, 2004. The courts ruled that reporting a collection account is indeed considered collection activity).

 

FDCPA Section § 809. Validation of debts [15 USC 1692g(b)] (b) If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) that the debt, or any portion thereof, is disputed, or that the consumer requests the name and address of the original creditor, the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or any copy of a judgment, or the name and address of the original creditor, and a copy of such verification or judgment, or name and address of the original creditor, is mailed to the consumer by the debt collector...

 

FDCPA Section § 805. Communication in connection with debt collection [15 USC 1692c(a)(3)] (a) COMMUNICATION WITH THE CONSUMER GENERALLY. Without the prior consent of the consumer given directly to the debt collector or the express permission of a court of competent jurisdiction, a debt collector may not communicate with a consumer in connection with the collection of any debt— (1) at any unusual time or place or a time or place known or which should be known to be inconvenient to the consumer. In the absence of knowledge of circumstances to the contrary, a debt collector shall assume that the convenient time for communicating with a consumer is after 8 o’clock antimeridian and before 9 o’clock postmeridian, local time at the consumer’s location; (2) if the debt collector knows the consumer is represented by an attorney with respect to such debt and has knowledge of, or can readily ascertain, such attorney’s name and address, unless the attorney fails to respond within a reasonable period of time to a communication from the debt collector or unless the attorney consents to direct communication with the consumer; or (3) at the consumer’s place of employment if the debt collector knows or has reason to know that the consumer’s employer prohibits the consumer from receiving such communication.

 

If the CA makes any attempt to do any of the above, they are in violation of the FDCPA. Keep any correspondence sent to you by the CA. Make and keep any record of who you talk to, including the time and date. File a suit in small claims court and show the court that the CA has violated the FDCPA. According to the FDCPA the court must award you not less than $1,000 in statutory damages. The court has the discretion to award more if greater damages are suffered by the consumer. See the section below "Civil Liabilities - How Much Can I Win?".

The Response You May Receive After Sending a Debt Validation Letter

Sometimes (rarely) sending a DV letter results in the CA suing you (sending you a summons and complaint for judgment); however, don't worry as they are in violation of the FDCPA and have just sealed their own fate. You will have to respond to their summons and appear in court; however, you will have an absolute defense in court to deny them judgment. Remember, it is the law firm's burden to prove that you owe the money -- NOT your burden to prove that you don't.

In court, cite the case:

Spears v. Brennan Indiana Court of Appeals, 745 N.E.2d 862 No. 49A02-0003-CV-169

The appeals court determined:

"Brennan (debt collection attorney) violated 15 U.S.C. § 1692g(b) when he obtained a default judgment against Spears (debtor) after Spears had notified Brennan in writing that the debt was being disputed and before Brennan had mailed verification of the debt to Spears."

If the debt collector simply follows your instructions and never sends a summons, but makes another harassing phone call, they are in violation as well. Make a record of the date, time, and who you talked to; take the CA to small claims court and state this information to the judge. This proves the CA's violation and you will win $1000.

After a DV Request, CA's May Send a Summons For Judgment

Collection agencies tend to make a habit of violating the FDCPA. After sending a DV letter, a CA will commonly send you a summons for judgment; however, don't worry as they are in violation of the FDCPA and have just sealed their own fate. Not only will you have an absolute defense in court to deny them judgment, but you will have the opportunity to sue them. Show the judge the summons letter and the court will see the CA has violated the FDCPA and reward you $1000.

Cite the case:

Spears vs. Brennan

The appeals court determined:

"Brennan (plaintiff collection agency attorney) violated 15 U.S.C. § 1692g(b) when he obtained a default judgment against Spears (defendant) after Spears had notified Brennan in writing that the debt was being disputed and before Brennan had mailed verification of the debt to Spears."

CA's can violate the FDCPA in many other ways, making it very easy for you to win $1000 or more. See a list of examples and laws that enforce the FDCPA.

Civil Liabilities - How Much Can I Win?

The FDCPA provides for a private right of action against violators. This means that you can get a lawyer and sue for damages. Following is an excerpt from the FDCPA describing the amounts that can be awarded.

 

FDCPA Section § 813. Civil liability [15 USC 1692k] (a) Except as otherwise provided by this section, any debt collector who fails to comply with any provision of this title with respect to any person is liable to such person in an amount equal to the sum of— (1) any actual damage sustained by such person as a result of such failure; (2) (A) in the case of any action by an individual, such additional damages as the court may allow, but not exceeding $1,000; or (B) in the case of a class action, (i) such amount for each named plaintiff as could be recovered under subparagraph (A), and (ii) such amount as the court may allow for all other class members, without regard to a minimum individual recovery, not to exceed the lesser of $500,000 or 1 percent of the net worth of the debt collector; and (3) in the case of any successful action to enforce the foregoing liability, the costs of the action, together with a reasonable attorney’s fee as determined by the court. On a finding by the court that an action under this section was brought in bad faith and for the purpose of harassment, the court may award to the defendant attorney’s fees reasonable in relation to the work expended and costs. (b) In determining the amount of liability in any action under subsection (a), the court shall consider, among other relevant factors— (1) in any individual action under subsection (a)(2)(A), the frequency and persistence of noncompliance by the debt collector, the nature of such noncompliance, and the extent to which such noncompliance was intentional; or (2) in any class action under subsection (a)(2)(B), the frequency and persistence of noncompliance by the debt collector, the nature of such noncompliance, the resources of the debt collector, the number of persons adversely affected, and the extent to which the debt collector’s noncompliance was intentional.

 

In laymen's terms, the types of damages that are awardable are:

• Statutory damages up to $1,000 for each case. This means that the violator can be charged even though there are no other damages.
• Attorney's fees. You can make the violator pay for your lawyer. This is big advantage; lawyers are expensive!
• Stress related injuries:
  • Heart attack, angina, chest constrictions;
  • Miscarriage;
  • Ulcers, diabetic flare-up;
  • Shock;
  • Loss of appetite;
  • Crying;
  • Nightmares; insomnia, night sweats;
  • Emotional paralysis;
  • Inability to think or function at work;
  • Headaches;
  • Shortness of breath;
  • Anxiety, nervousness; fear and worry;
  • Hypertension (elevation of blood pressure);
  • Stress to children;
  • Irritability;
  • Hysteria;
  • Embarrassment, humiliation;
  • Indignation and pain and suffering. And this is just a partial list!
• Monetary damages:
  • Payment of a debt barred by the statute of limitations;
  • Taking one's property unlawfully or intimidating a debtor to return property by violating the FDCPA, e.g. "If you do not return your DVD player to the store, we will bring criminal charges!"

Your attorney may use medical (psychiatric/psychological) testimony, but does not need to. Damages for emotional distress can be claimed even without medical support. This does not mean they will always be believed, of course. It is up to the judge or jury to decide if the plaintiff is telling the truth. Anyway, the plaintiff in the FDCPA lawsuit starts with a tremendous advantage, proof-wise.

The Mini-Miranda Warning

Each time a debt collector contacts you, he must give you what is know as a "Mini-Miranda Warning" This warning received that name because it is reminiscent of the warnings that police should give you if you are arrested, however, "Mini-Miranda Warnings" have nothing to do with criminal law. A "Mini-Miranda Warnings must contain the following words (or words imparting this meaning):

"Hello, I am _________(name of collector). I am (or this office is) a debt collector representing____________(creditor). Information obtained during the course of this call will be used for the purpose of collecting the debt."

If the creditor has not been advising you as above, you may have a right to sue.

Letters you receive in the mail from collectors also must contain similar warnings such as: 

"This is an attempt to collect a debt. Any information obtained will be used for that purpose. Unless within 30 days of your receipt of this notice, you notify us that you dispute the validity of this debt, it will be assumed to be correct. If you notify this office within thirty days that you dispute the validity of the debt, we will obtain verification of the debt or a copy of the judgment. If you request it within 30 days, we will provide you with the name and address of the original creditor (if different from the current creditor)."

If the letter does not state the above, or words similar or close to the above, you may also have a right of action. Furthermore, did you know that no bill collector or creditor has the right to contact any third person about your debt, except to get information solely to locate you? This means that if a bill collector or a creditor tells any except you that you owe them money, they too can be sued.

Now Clear Your Credit Report

Because the CA is not allowed to verify any debt with a credit reporting agency until they have provided adequate proof to the consumer, you should send an a dispute letter, certified mail return receipt, to the three credit reporting agencies disputing the collection on your credit report. If a CA does verify the account and does not delete it, they have violated the FDCPA.

The CA's have only 30 days to provide adequate verification to the consumer. If they cannot provide such proof, they must remove the collection from your credit report.

Throughout the debt validation process, you should understand the basic things you should do and not do, say and not say. See "Basic Do's and Don'ts."

 

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